According to economist and NYU professor Nouriel Roubini, the United States’ strategic competitor will abandon the dollar in favor of a “bipolar” global reserve currency system. In a series of recent interviews, Roubini emphasized that there is little doubt that China and Russia are working with their friends to develop an alternative monetary system that is independent of the US dollar.
“Unfortunately, the cold war between the United States and China is getting colder by the day…
Clearly, the United States’ Strategic Rivals – China, Russia, Iran or Korea, Pakistan, and their own friends and allies – want to build an alternative monetary economy and global reserve currency system because they are concerned about the sanctions imposed by the US, Europe, and others. other.
The Chinese have $ 1 trillion in reserves. As a result, they will propose the RMB as an alternative to the US dollar, and we will gradually switch from a unipolar to a bipolar global reserve currency system.” According to Roubini, the process won’t happen quickly, but the end result will curtail the global economy and drive up the cost of making things.
“We have moved from free trade to secure trade, from offshoring to friend-shoring, and from just-in-time supply chain to just-in-case supply chain.” These items are expensive; they reduce global growth and increase production costs… This requires less funding for our twin fiscal and current account deficits, even though we still have a very large supply of private and government debt. When the US has a very high private-to-government debt ratio, this can increase financing costs.”
Roubini believes the latest upheaval in the US financial sector is far from over. “I believe that the worst of banking stress is still ahead of us, and of course, this credit crisis will significantly reduce economic growth.” They lend to SMEs, individuals, and commercial and residential real estate. The credit crunch will send the US economy into a slump later this year.”